Structuring Equity Compensation for Partnerships and LLCs
Navigating Capital and Profits Interests Plus Section 409A and Tax Consequences
Recording of a 90-minute CLE/CPE webinar with Q&A
Conducted on Tuesday, February 14, 2017
Recorded event now available
This CLE/CPE webinar will provide employee benefits counsel with an overview of the types of equity compensation arrangements available to partnerships and LLCs. The panel will discuss tax consequences, advantages and disadvantages, design and structuring, and implementation considerations.
Several alternatives are available to partnerships and LLCs for providing equity compensation to their employees, including granting profits interests, capital interests, and options to acquire such interests.
Partnership and LLC equity compensation arrangements present executive compensation counsel with complex design and structuring challenges, unlike corporate equity compensation, which is relatively straightforward.
IRS guidance is lacking on a number of important issues, including whether a partner/member can be an employee for tax purposes, how Section 409A applies, and when 83(b) elections should be made.
Listen as our authoritative panel offers solutions and strategic approaches for structuring equity compensation for partnerships and LLCs and for avoiding common pitfalls that can lead to disastrous tax consequences.
- Equity compensation alternatives available to partnerships and LLCs
- Profits interests
- Capital interests
- Options to acquire capital or profits interests
- Phantom arrangements
- Income tax consequences/advantages/disadvantages
- Design, structuring and implementation considerations
- Section 83(b) elections
- Capital account book-ups and valuation
- Section 409A considerations
- Impact of fee waiver proposed regulations
- Effect of partner/member status on being employee
- Effect of partner/member status on employee benefits
- Conversion to C corporation
The panel will review these and other key issues:
- How does a capital interest differ from a profit interest and what tax ramifications result from the type of equity interest granted?
- How does Section 409A apply to equity interests in LLCs?
- Should a Section 83(b) election be made for unvested interests?
- Can a partner or LLC member receiving an equity interest also be an employee of the entity?
After completing this course, you will be able to:
- Distinguish the economic and tax differences between capital interests and profits interests
- Recognize the tax consequences associated with different types of partnership and LLC equity interests
- Determine how Section 409A applies to partnership and LLC equity interests and when and whether a Section 83(b) election should be filed
- Ascertain tools to evaluate the impact of granting a partnership or LLC interest to an employee and possible structuring alternatives relating to dual-status issues
Edward E. Bintz, Partner
Arnold & Porter,
Mr. Bintz specializes in employee benefits and executive compensation. He represents clients on a broad range of compensation and benefits matters, including executive compensation programs, the compensation and benefits aspects of merger and acquisition transactions, plan terminations, ERISA’s fiduciary duty and prohibited transaction rules, and benefit plan controversies.
Brian J. O'Connor, Partner
Mr. O'Connor co-chairs the firm's Tax and Wealth Planning Group and provides tax advice to partnerships and to public and closely held businesses and their owners. Before coming to Venable, he worked as attorney-advisor with the IRS Office of Chief Counsel, assigned to projects and guidance involving partnerships and S corporations.
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